UK economic growth resumed in August after an unexpected drop in July, with bars, restaurants and festivals benefiting from the removal of most of the remaining pandemic restrictions.
The Office for National Statistics (ONS) said gross domestic product rose 0.4% in August from the previous month as consumers increased spending on leisure in the first full month without Covid checks in England.
However, the ONS reduced its growth estimate for July by monthly increase of 0.1 % to drop th The same amount after new economic data revealed a worse blow to auto manufacturing caused by global supply chain issues and microchip shortages.
The last snapshot showed activity in accommodation and food.Services, along with the arts, entertainment and leisure, have contributed the most to the growth of the dominant service sector in the UK, which accounts for around 80% of the UK economy.
Analysts said an increase in UK vacations as restrictions on international travel remained in place helped boost the accommodation industry, which grew by 23%, thanks to strong sales growth in hotels and campsites.
Air transport continued to grow as restrictions on domestic travel overseas have been gradually lifted, taking off 27.5% in August, although it is still 75% below its pre-Covid level.
Growth in August was offset by a decline in the health sector amid declining tests and vaccinations for Covid-19. Retail sales have chollowed out, reflecting shortages on Main Street and consumers shifting their spending more from goods to services after the easing of pandemic controls.
The production - which includes manufacturing, energy and mining - rose 0.8% amid increased production of crude oil and natural gas after recent temporary shutdowns for maintenance of an oil field.
The challenges of soaring prices and shortages of materials including steel, concrete, wood and glass have hit the construction industry , with production down 0.2% in August after falling 1% in July.
Overall, the ONS has said the economy remained 0.8% below its pre-pandemic level in August.
Paul Craig, portfolio manager at Quilter Investors , diceclarified that supply issues would undoubtedly weaken growth expectations for the coming months, as disruptions caused by the coronavirus and Brexit weighed on the economy.
" The creaky UK economy is taking its time to come to life. The problems now lie no longer in the demand but in the supply. Acute labor shortages in several sectors of the economy along with chronic skills shortages have the potential to thwart the economic recovery and may well dampen expectations of a strong economic recovery in the months to come. winter, "he said.